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On Wednesday, Bernstein analysts maintained their Outperform rating on Tokyo Electron Limited (8035:JP) (OTC: TOELY) with a steady price target of JPY33,800.00. The endorsement comes despite acknowledging some potential headwinds, including the macroeconomic impact of tariffs and increased research and development (R&D) expenses that have prompted a downward revision of earnings forecasts.
Analysts at Bernstein project that Tokyo Electron’s recent financial performance and forward-looking guidance will have a modestly positive effect on the market. The company has demonstrated strong performance with revenue growth of 26.17% in the last twelve months and has maintained dividend payments for 34 consecutive years. They anticipate that potential upside in guidance may stem from the company’s operations in China. However, they have adjusted their earnings per share (EPS) predictions for the next two years downward by 8.5% and 4.9%, respectively, due to the aforementioned factors.
Despite the reduced earnings forecasts, Bernstein’s estimates remain optimistic, sitting 4.3% and 7.8% above the consensus for the next two years. The analysts have based their price target on a 12-month forward price-to-earnings (P/E) multiple of 22 times. As of April 30, this target implies a 59% potential upside for Tokyo Electron’s shares.
The reiteration of the Outperform rating reflects Bernstein’s continued confidence in Tokyo Electron’s stock performance over the next year. The analysis by Bernstein factors in both the potential risks and the opportunities that may influence the company’s financial trajectory in the near term.
In other recent news, Bernstein analysts have maintained their Outperform rating on Tokyo Electron Limited, keeping a price target of JPY34,600.00. The analysts highlighted that etching, deposition, and bonding are key growth drivers for the company, with etching revenue projected to triple over the next five years. This segment accounted for 32% of Tokyo Electron’s revenue last year, underscoring its significance. Bernstein noted that the company’s revenue growth targets surpass industry expectations, particularly in advanced logic and DRAM markets. Tokyo Electron’s strong performance in etching and deposition is expected to benefit from the industry’s shift towards complex transistor structures and 3D configurations. The company’s exposure to these areas exceeds 50%, positioning it well for industry tailwinds. Additionally, advanced packaging contributes over 10% of Tokyo Electron’s revenue, and share gains in the semiconductor processing equipment market are potential sources of further upside. Bernstein also mentioned the normalization of revenue from China to the 30% range as a positive development. These factors collectively reinforce Bernstein’s positive outlook for Tokyo Electron’s growth prospects.
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